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Investors are returning to Dunmore-based First National Community Bancorp. as recent trades drove shares to their highest level since August 2009. The stock closed Friday at $9.03. A month ago, shares traded at $4.40.

The rebound for the parent company of First National Community Bank began in advance of the bank's annual meeting of shareholders held Monday, Dec. 23, which saw the return of Louis A. DeNaples to the bank's board of directors after a five-year leave of absence and a bitter, successful battle with regulators who attempted to ban him from banking. The bank lost tens of million of dollars in 2009 and 2010, had to restate earnings, and had to operate under a consent order with regulators that remains in effect.

The banking company clawed its way back to profitability in 2013 and investors expect blue skies ahead.

Investment adviser Lou Ingargiola, of Ingargiola Wealth Management Group of Dunmore, said FNCB is generating a lot of positive buzz among investors. But his caveat to those considering buying shares of FNCB or any community bank, is that thinly-traded stock may be easier to buy than to sell.

"Two things you look for in stock ownership is control and liquidity and FNCB stock is not liquid," he said. "If you try to sell it - you probably won't get the price you see on the ticker. So it's something you have be ready to hold for the long haul."

Mr. Ingargiola guesses most of the trades placed on FNCB are for a few hundred shares placed by people who want to be along for FNCB's ride.

FNCB salad days of reliable dividends and ever-increasing stock values are hardly back. In 2006, the stock was valued at more than $20 per share.

The bank remains under a consent order and the heightened gaze of regulators.

Here's a look at some of the unresolved issues FNCB hopes will resolve in 2014:

- The regulators' consent order.

The bank entered a lengthy consent order with regulators that remains in effect and keeps the bank under heightened scrutiny. Bank officials say they are in compliance with all terms excepts one: capital ratios, a key measure of a bank's soundness.

At the shareholders meeting, bank officials hope that under current trends, they will meet those targets - but that doesn't mean the consent order will disappear.

"Terminating the order remains under regulators' discretion," said Bert Ely, of the Ely & Co., an Alexandria, Va.-based financial institution consultant. "They can say, 'Even through everything is fine, we have concerns about this.'"

Regulators will issue a termination order when it formally releases the bank.

- The dividends issue?

Many holders of small bank stock look to them for income through cash dividend payments. Under the consent order, a dividend payment must be approved by regulators.

Chief executive officer Steven Tokach told shareholders he asked to make a dividend payment, but was turned down.

A dividend, of course, is a payment of capital to shareholders. With the bank's focus on improving capital ratios, it wouldn't make sense for the bank to make dividend payments, Mr. Ely said.

"Management and shareholders are in this together and they need to be patient, play nice, run a sound bank and dividends will eventually resume," Mr. Ely said.

Even if the consent order is terminated, regulators have ways to limit or prevent dividend payments, he said. They may make an informal order asking the bank to check with them before issuing a dividend. Or they may ask the bank for a three-year capital plan.

- Will Mr. DeNaples become chairman?

Mr. DeNaples received the Officer of the Comptroller of the Currency's official "does not oppose" decision to serve as a director prior to the annual meeting. The approval is a requirement under the consent order. According to his agreement with regulators, he requires a separate approval to claim the spot of chairman.

Mr. DeNaples is expected to seek that approval. Meanwhile his brother, Dominick L. DeNaples, continues to serve as chairman. Then there is the holding company board of directors, which mirrors the board of the underlying bank. The directorship of that entity sits under the U.S. Federal Reserve Bank. Federal banking regulators tend to follow the actions of the other, observers say. The federal reserve bank is expected to clear the way for Mr. DeNaples to serve on that board, as well.

Contact the writer: dfalchek@timesshamrock.com

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